And Now For My Next Magic Trick… NO Inflation!

By Silver Shield, on January 16th, 2011

In “Presto! 9.4% Unemployment! How the Government Lies”, I detailed how and more importantly why the government lies to us about the real face of 25%+ unemployment. This article caused quite a stir and was picked up all over the web. It started to clarify the anger and frustration that we are all feeling. We know there is something terribly wrong and yet the government, media, and corporations are singing us a lullaby like, “Don’t worry your pretty little head and go back to sleep.” Well I am here, not to sing you a song and dance, but to wake you up because we are in for dire times and the sooner you face facts and understand what really is going on, the better.

And now for my next trick… I will now show you how the government steals our entire life’s work through the manipulation of the inflation numbers. These statistics/lies, may seem like “little white lies,” but they are at the core of the massive global corruption. The statistics/lies that the government pump out, hide the generational theft that has gutted America. Instead of candle light vigils held for slain murder victims, Americans should be holding them in front of the Bureau of Labor and Statistics. Far more pain has come from the constant grind of inflation in our lives and the wars and tyranny that it has funded.

“Lenin was certainly right, there is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose.”~ John Maynard Keynes

John Maynard Keynes is by far the most influential economist in this current dollar/debt paradigm. His work has given the intellectual foundation upon which the American Empire has wrapped it’s tentacles around the globe.

The government minions creates the fictional numbers…

The media sycophants fool us with their stories…

The financial predators sells us the dream…

The military industrial complex provides the muscle…

The banksters laugh at how simple it all is.

“We are all Keynesians now.” ~Richard Nixon 1971

Lets knock this dollar/debt paradigm down a notch or two with the best weapon we have, the truth. Most people think inflation is the act of prices rising. The reality is that rising prices are merely the symptom of inflation and not the cause. Inflation is, at all times, a monetary event. When the money supply is created in excess of the available goods and services of an economy, inflation is increased. So every time the government whips out its Federal Reserve Black Card and creates a trillion dollars out of thin air, it shoves more dollars into a failing economy. The more money/debt into an economy that is creating less goods and services, the more inflation we get. The more dollars are in circulation, the less they are worth. So in reality, prices of the goods are not going up. It is the value of the dollar that is going down. Therefore, you’ll need more dollars to buy the same amount of goods.

Boomers probably remember the days of 25 cent gas when they were kids. Well, back then, a quarter was 90% silver and a gallon of gas was still a gallon of gas. The only difference between now and then is our measuring stick, the dollar. After 1964, the government took the silver out of the coins. After 1971, the government took the international gold backing out of the dollar. Since then when have created trillions of dollars of new money/debt. This is flooding the world markets with more and more worth-less dollars. Simple math shows the more dollars chasing after the same amount of goods equals higher prices. Again, the price of goods are not going up, it is the value of the dollar that is going down. Let’s get back to the 25 cent gas scenario. Gas right now is at about $3.00 a gallon and as of last September, the value of the 1964 90% silver quarter was at about $3.00. Today, that same quarter is worth about $5, which tells me that we are going to have $5 gas this year.

So now that you know that, our media will blame the decline in our purchasing power on any other bad guy in the world except the real creators, the banksters. Let us look at a recent Drudge Report headline about $100 oil.

Remember, the more dollars are printed, the less they are worth and if you sell anything of value you are going to say to yourself, “if you are destroying the purchasing power of your currency, I want more to make up for the lost value.” If truth be told, the headline would look something more like this…

The Federal Reserve is the “lender of last resort” and the government is the “spender of last resort.” This sick symbiotic relationship of bankers gaining more profit from the debt/money they create and the government gaining more power from the money/debt they spend is coming to an end.The infinite debt growth model is going to meet a very finite world. This will not have a happy ending.

I don’t tell you this to depress the hell out of you. I do this because once you see how the world really works, you can prepare for this. Wealth is neither created or destroyed, it is merely transferred. When the stock market crashed, wealth was not destroyed. It was transferred to those that shorted the market or had political connections to get bailed out. We are going to have the largest transference of wealth the world has ever seen, when our dollar/debt paradigm collapses. It will make 2008 look like nothing but a blip on the radar screen.

It will be amazing to see so many lose so much.

What will be more amazingis how much that will be made by so few that were aware and prepared to be in the right place at the right time.

I can tell you that the process of being in the “right place at the right time,” starts with the understanding of how the world really works and accepting the fact that it is not the way it is told to us. The next step is educating yourself in an excellent education found at my Sons Of Liberty Academy. This education is not really for informational purposes, it is to give you an absolute certainty of knowing where our world is heading. Once you have absolute certainty, you can then take massive action to do what must be done for yourself.

The government and the Fed are ramping up the printing press to create more debt/money to fund this system. You can see why the extension of the Bush tax cuts mean absolutely nothing. The government is simply going to print the money it needs and that money is going to literally tax everything and everyone. Actually, directly taxing us would be better because we would not have to pay the interest on the new debt. If they truly taxed what we need to include all of the unfunded and off balance sheet deficits, they would have to tax 100% of the income out there. It is not possible to tax that much because people will not work. People would have no hope and give up on everything.

Printing money is better for the Elite. It makes people to run faster on the treadmill because they still have hope. Mother and fathers work extra hours or go further into debt thinking one day it will all pay out. Little do they know they are being manipulated into using their precious time and energy into a losing effort. All of those extra hours and dollars will mean nothing when the dollar paradigm collapses. Think about it, the deficit this year is at about $1.5 Trillion dollars. They will cover this debt with creating out of thin air, $1.5 Trillion dollars. That is the equivalent of the entire American GDP in 1974. With a couple strokes of the Fed’s iMac, they can duplicate the work/wealth of every American in 1974. Think of all of those hours and hard work that just got devalued with a ledger entry.

By printing more money, the dollars we save and earn become worth-less and is an outright confiscation on our wealth.The real sin of inflation is that it is a regressive tax on the American people. It is regressive because it hurts the poorest the hardest. If basic necessities become more expensive, they are hurt the most. Inversely, it benefits the rich inordinately, because while their cost of living goes up, their assets go up further and tax free in some cases. That is why you can always plan on more inflation with our government and banking system since those that own the system will benefit from it.

One other point is that the well connected Elite are also the first ones to spend the new money in the economy. They can buy assets before the inflation pushes up the prices. Before the 1980’s when you thought of successful people, they were probably oil men, cattle men, industrialists, basically people who who worked in the real economy. Since then, it has been people that work in the false economy of finance, insurance, real estate, government contractors, and even the information technology. There is much more money to be made in the shuffling of money that creates no value than in the creation of real value. We are in the process of switching back to the real economy and the adjustment is going to be devastating for most of humanity.

Quantitative easing is another big word used to confuse us. Quantitative easing is simply a monetary policy of increasing the quantity of money in circulation by printing money to purchase real assets such as 30 year treasuries. This coupled with the fiscal policy of deficit spending is designed to lessen the value of money and cause asset inflation, which of course leads to bubbles. How long do you think this game would last if they just told the public the truth, that it is a massive counterfeiting operation to prop up an unsustainable, generational Ponzi scheme and generate massive, risk free profits to insiders?

“The last duty of a central banker is to tell the public the truth.” ~Alan Blinder Vice Chairman of the Federal Reserve

Knowing that the elite would never admit the truth to us, they need lots of tricks to fool us and build plausible deniability. We have all heard that perception is reality. Well, bankers/government/economists, don’t really care about the money supply. Again, the more debt, the more money, the more profits, the more power. What they desperately care about are our inflation expectations.

When people feel that there is little inflation in the system, they tend to save their money. This increases the value of the Elite’s paper money system. When inflation expectations are high, people tend to buy now while their money still has purchasing power, which of course fuels more inflation. This speeding up of spending is called money velocity. This compounds the problem of the total amount of money in the system. When money is turned over faster and faster in the economy, it acts as a turbo charger. As you can see, our reaction to inflation causes more inflation. They hoard of goods, speculate and even panic buy.

It is important to manage expectations before the inflation genie gets out of the bottle since it is more effective than price controls. When inflation kicks in, food and energy always go up at least twice as fast and any other asset inflation. With more inflation, they need more currency to reflect the higher prices. This also furthers the inflation. When this happens, people get pissed off and more often than not, governments fall and the Elites lose control. They must fool you to keep you calm as they gut you.

The main reason why the government hides this inflation, is that they are the main beneficiaries of inflation. The government profits off of manipulating the inflation numbers to sound lower than they really are. By understating inflation, the government…
–Lowers interest rates on debt it must pay for.
–Lowers the inflation adjusted payments it makes to social security and government employees.
–Keeps consumer inflation expectations under control.
–Allows the government to spend more money it does not have.
–Artificially lowered inflation boosts the GDP and shows a stronger economy than in reality.
–Strengthens the dollar to allow higher than normal purchasing power.
–Keeps American voters passive as benign inflation is not an issue.

By increasing inflation with deficit spending and monetary policies like QE they…
–Are able to buys real goods for worthless pieces of paper.
–Lowers the real value of debt.
–Pays for larger government without raising taxes.
–Forces mothers into the work force.
–Breaks up the family resulting in more power to the state.
–Asset prices rise along with all of the sales and property taxes.
–Forces families into higher tax brackets.
–Taxes money sitting in savings.
–For a while, people think they are getting rich.

So here are 4 main tricks the government uses to understate inflation.

1. Hedonic Adjustments. If a car goes up in price from say $20,000 to $21,000, it would on the face of it, show a 5% increase in the price. The government does not want that, so it creates an adjustment, which takes into account value of the options added. They arbitrarily create a dollar figure of value of say a better standard radio, better tires, lumbar support, upgraded cloth seats and dual exhaust. The government may say that it adds $1,500 of value to the car. So when calculating for inflation the price of the car went down 2.5% to $19,500. It does not matter if you don’t want, need, or even value the options. The price goes up for you and down for the government.

A trick corporations use is say a 12 oz. soda is $1.00 and through smaller cans they are now 10 oz. and still charge a $1.00. You lose 17% of your soda which costs more per oz. The government says it is still a can of soda and it is the same price, no inflation. Presto!

2. Substitution. If inflation cannot be tamed through Hedonics, they simply substitute the product in the basket with a less expense product. Say the original basket of goods had Filet Mignon in it and it went up in price from $9 to $10. They could simply substitute it with Porter House steak at $6 and say inflation went down to eat meat. They could then substitute it with ground beef, chicken, pork, or even dog food… The very fact that people would substitute a higher product for a lesser one because of cost, is clear evidence of inflation, yet they use this to understate it. If housing gets too expensive, they use rental rates. Remember it is all about containing expectations.

3. Weighting. When that does not work, the government changes the weighting of the hotter category with a lesser one. For example health care and education are notorious for rising costs. Say they make up 20% of the economy, for the CPI the government might only weight it at 15% lessening its affect on the over all number. Or they might weight certain regions in the country more than others. Or they might weigh discretionary consumables that are known to fall in price, that we buy infrequently, and are not vital more than necessities that we need and buy everyday.

4. When all else fails, just don’t count it at all. Left out of all of these equations are the most essential part of our lives, food, energy and taxes. I don’t know about you, but these three are the things that I care about most in my budget.

In addition to these internal tools, the government can export inflation by sending money overseas, so it never hits our economy. If money can also be pushed into stocks and does not enter the real economy, that benefits the system also. Especially when there is orchestrated fleecing of the public through crashes.

Let me wrap this up with something we all know, Monopoly. We have all played and loved the game of Monopoly. The goal of Monopoly is to essentially put your neighbors into the poor house and own everything. This game is made exciting through inflation. You see every time you pass go and collect $200, think of it as the Fed injecting money into the economy. This process increases the money supply every round and allows for more assets to be purchased, whether it is more income producing properties or capital improvements like hotels. The reason why I say inflation makes it “fun” is because the more money that enters the game the faster the money is made and lost, eventually leading to everyone losing except for one.

Monopoly is exactly how our economy works. Bankers give away money allowing insiders use the fake money to buy real assets. My question is, why do we have an economy that is designed to put our neighbors in the poor house and concentrate wealth into the hands of the banker’s buddies? The short answer is that when you let bankers make the laws, this is inevitable. The long answer lies with us and the fact that we remain willingly ignorant of these criminal activities.

Try playing Monopoly another way. No inflationary “Pass Go ” money, no community chest, no forced redistribution of wealth, etc. It makes for a pretty boring game. But that is how our real economy should work. If there was no counterfeiting or forced redistribution of wealth, no one can usually can put together a Monopoly to bankrupt everyone. The Elite know this very well and have created an inflationary Monopoly economic system that in the end will bankrupt us all and they win. This fast moving, slight of hand economy has benefited no one except the insiders and it is coming to an end. No one has even begun to think about the ramifications of this collapse, much less prepared for it.Those that did not see this coming will have no idea what to do when it gets here. Spread this article around and wake some people up.

25 comments to And Now For My Next Magic Trick… NO Inflation!

Good article however please take a look at Martin Armstrong’s ideas of money. He says that inflation is caused by lack of confidence in money and not necessarily more of it. He is currently a political prisoner jailed in the US. Since he does not have a computer, he types his articles and they are published by others on the outside.
He also says gold is a hedge against political instability and government default and not inflation.
Please take a look at this, I think you will really appreciate it.

I have been following Martin Armstrong for quite some time and his articles are interesting. If he said this, he is again confusing the cause of inflation with the symptom of inflation.
Inflation is at all times a monetary event. What causes people to lose confidence in money? When it ceases to function it’s three roles 1) Medium of exchange 2) Unit of account 3) Store of value. Roles one and two are protected to the bitter end by legal tender laws and government coercion. The government is helpless to the third role when the market weighs in on the store of value. The more money that is printed relative to the goods and services of the economy lowers the value of the currency. It will get to a point where the value will drop so low that people will doubt the purchasing power of their currency so much that they panic buy anything that has tangible value.
“Paper money eventually returns to its intrinsic value: zero.” – Voltaire
The loss of confidence is a symptom inflation and not the cause.

“Another trick they use is say a 12 oz. soda is $1.00 and through smaller cans they are now 10 oz. and still charge a $1.00. You lose 17% of your soda which costs more per oz. The government says it is still a can of soda and it is the same price, no inflation. Presto!”

This isn’t correct. Food and drinks are measured on a dollar per gram/liter basis. CPI would take into account the smaller can.

Maybe you can do one titled: And Now For My Next Magic Trick… NO Money!

I think people would be interested in learning that their bank accounts are populated with nothing more than a bank’s promise to pay. And that when a bank fails all their bank accounts transform into the bank’s debt leaving them with nothing, which the FDIC covers by issuing new promises to pay from their account. And maybe you can touch upon the fact that of the billions in transactions conducted on Wall Street on a daily basis, not one single dollar bill is involved.

[…] to understate real inflation, just like they do with real unemployment. (Read my articles on Inflation and Unemployment.) By understating inflation it destroys the real returns of investment like bonds. […]

[…] are very flawed and benefit the government, as they lower the reported inflation rate. (Read And Now For My Next Trick… No Inflation.) The official inflation implies that the money supply has risen 200% in the past 30 years. Every […]

[…] of the currency through four major tricks that I cover in detail in my article on inflation. Click Here. The four tricks are hedonic adjustments, substitution, weighting and subtraction. This allows the […]

[…] of the currency through four major tricks that I cover in detail in my article on inflation. Click Here. The four tricks are hedonic adjustments, substitution, weighting and subtraction. This allows the […]

[…] of the currency through four major tricks that I cover in detail in my article on inflation. Click Here. The four tricks are hedonic adjustments, substitution, weighting and subtraction. This allows the […]

[…] of the currency through four major tricks that I cover in detail in my article on inflation. Click Here. The four tricks are hedonic adjustments, substitution, weighting and subtraction. This allows the […]

[…] is out right lying about real inflation. They do this for many reasons for which I discuss here. If the government was telling the truth about inflation we would not see benign inflation at 2% we […]

[…] is out right lying about real inflation. They do this for many reasons for which I discuss here. If the government was telling the truth about inflation we would not see benign inflation at 2% we […]

[…] of the currency through four major tricks that I cover in detail in my article on inflation. Click Here. The four tricks are hedonic adjustments,substitution,weighting and subtraction. This allows the […]

[…] of the currency through four major tricks that I cover in detail in my article on inflation. Click Here. The four tricks are hedonic adjustments,substitution,weighting and subtraction. This allows the […]

[…] expectations. There are many tools the Elite use to control the masses, like lying about real inflation or unemployment. If people think inflation is running high, they will dump the dollar on to any […]

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